Denver Gold Forum
September 21, 2015
Denver Gold Forum September 21, 2015 Octavio Alvdrez, CEO LSE:Fres - - PowerPoint PPT Presentation
Well placed to address cyclical uncertainties Denver Gold Forum September 21, 2015 Octavio Alvdrez, CEO LSE:Fres BMV:Fres www.fresnilloplc.com Disclaimer This document includes statements that are, or may be deemed to be,
September 21, 2015
21/09/2015 This document includes statements that are, or may be deemed to be, “forward-looking statements”. These forward- looking statements can be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, “plans”, “projects”, “anticipates”, “expects”, “intends”, “may”, “will”, or “should” or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this document and include, but are not limited to, statements regarding the Fresnillo Group’s intentions, beliefs or current expectations concerning, among other things, the Fresnillo Group’s results of
By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and
Fresnillo Group’s operations, financial position and liquidity, and the development of the markets and the industry in which the Fresnillo Group operates, may differ materially from those described in, or suggested by, the forward-looking statements contained in this document. In addition, even if the results of operations, financial position and liquidity, and the development of the markets and the industry in which the Fresnillo Group operates are consistent with the forward- looking statements contained in this document, those results or developments may not be indicative of results or developments in subsequent periods. A number of factors could cause results and developments to differ materially from those expressed or implied by the forward-looking statements including, without limitation, general economic and business conditions, industry trends, competition, commodity prices, changes in regulation, currency fluctuations (including the US dollar and Mexican Peso exchange rates), the Fresnillo Group’s ability to recover its reserves or develop new reserves, including its ability to convert its resources into reserves and its mineral potential into resources
Forward-looking statements may, and often do, differ materially from actual results. Any forward-looking statements in this document speak only as of the date of this document, reflect the Fresnillo Group’s current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Fresnillo Group’s operations, results of operations, growth strategy and liquidity. Investors should specifically consider the factors identified in this document which could cause actual results to differ before making an investment
Rules or applicable law, the Fresnillo Group explicitly disclaims any obligation or undertaking publicly to release the result of any revisions to any forward-looking statements in this document that may occur due to any change in the Company’s expectations or to reflect events or circumstances after the date of this document.
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World’s largest silver producer (45 moz in 2014) and Mexico’s second largest gold producer (596 koz in 2014) Market cap of US$6.8 billion* Silver resources of 2 billion ounces and gold resources of 34 million Mining concessions of 2 million hectares in Mexico and 370 thousand hectares in Peru Cash costs and AISC amongst the lowest in the industry Substantial, high quality project pipeline and strong commitment to disciplined and sustainable growth: production target of 65 moz of silver and 750 koz of gold by 2018 Focus on projects that can be developed into low-cost, world- class mines
Fresnillo plc mines (6 and a satellite mine)** Development projects (2) Advanced exploration projects (4) Prospects in drilling Prospects at an early stage
SOUTH PERU HERRADURA DISTRICT CIÉNEGA DISTRICT FRESNILLO DISTRICT ORISYVO SAN JULIÁN
Our Business Model…
recovery rates
…supported by four strategic pillars to create value
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Stabilise and then improve ore grades and production to provide solid base for potential expansion Ore grades expected to move towards reserve grade once operating stope flexibility regained
Key operating statistics 1H15 Silver production – moz 7.8 Cost per tonne – US$/t 48.5 Gold production – koz 15.1 Cash cost - US$/oz 5.8 Silver ore grade - g/t 220 AISC - US$/oz 11.1 Gold ore grade - g/t 0.50 AISC (LoM) (2023) – US$/oz 6.20
1H15 silver production decreased: Lower silver
grade reflecting limited access to high ore grade areas Lower volumes processed due to development delays and stope instability Actions taken: Enhanced contractor supervision Additional contractors Measures to manage stope instability Should allow development rates of c.4,000m / month to be maintained Advancing declines in order to reach higher grade veins & regain operating stope flexibility
21/09/2015
Efficiency improvements at Saucito II planned for 1H16: installation of vibrating screens Conclude analysis of alternatives for potential expansion to either 5,000 or 6,000 TPD post good exploration results
Key operating statistics 1H15 Gold production – koz 45.7 Silver production – moz 2.1 Gold ore grade - g/t 2.25 Silver ore grade - g/t 117 Cost per tonne – US$/t 66.7 Cash cost - US$/oz 297.0 AISC - US$/oz 650.0 AISC (LoM) (2026) – US$/oz 803.1 Key operating statistics 1H15 Silver production – moz 11.4 Gold production – koz 44.7 Silver ore grade - g/t 341 Gold ore grade - g/t 1.50 Cost per tonne – US$/t 42.7 Cash cost - US$/oz 0.6 AISC - US$/oz 6.0 AISC (LoM) (2021) – US$/oz 6.0
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Expect to reach steady state production by 4Q15 after ramp-up and resolution of solution processing issues
Key operating statistics 1H15 Gold production – koz 188.1 Gold ore grade – g/t 0.74 Ore processed – mt 10.9 Total volume hauled – mt 57.7 Cost per tonne – US$/t 8.7 Cash cost – US$/oz 490.2 AISC - US$/oz 873.2 AISC (LoM) (2019) – US$/oz 717.0
Continue to focus on containing costs and maximising efficiency of production
Key operating statistics 1H15 Gold production – koz 70.5 Gold ore grade - g/t 0.48 Ore processed – mt 8.7 Total volume hauled – mt 42.3 Cost per tonne – US$/t 8.2 Cash cost - US$/oz 897.9 AISC - US$/oz 940.9 AISC (LoM) (2019) – US$/oz 1,124.5
YEAR
PROJECT
2018 2019
Investment (US$ million) Expected Avg. Annual Production
2020 2015 2016 2017
515
10.3 mill Oz Ag & 44 thds Oz Au
SAN JULIÁN
CONSTRUCTION LEACHING PLANT PRODUCTION CONSTRUCTION FLOTATION PLANT
30
3 mill Oz Ag
FRESNILLO 9,000 TPD (Optimization project)
MINE DEVELOPMENT & PLANT ADEQUATION PRODUCTION DETAILED ENGINEERING
155
3.5 mill Oz Ag & 13 thds Oz Au
PYRITES PLANT (Optimization project)
DETAILED ENGINEERING LEACHING PLANT CONSTRUCTION PRODUCTION CONSTRUCTION TAILINGS FLOTATION
55
15 thds Oz Au & 1.3 mill Oz Ag
CIENEGA 5,000 TPD (Optimization project)
MINE DEVELOPMENT PRODUCTION DETAILED ENGINEERING PLANT CONSTRUCTION
350
136 thds Oz Au
ORISYVO
MINE DEVELOPMENT PRODUCTION BASIC ENGINEERING DETAILED ENGINEERING PLANT CONSTRUCTION
300
10 mill Oz Ag & 30 thds Oz Au
JUANICIPIO
MINE DEVELOPMENT PRODUCTION BASIC ENGINEERING DETAILED ENGINEERING PLANT CONSTRUCTION
155
200 thds Oz Au
CENTAURO EXTENSION 365
225 thds Oz Au
CENTAURO DEEP
DEVELOPMENT PRODUCTION BASIC ENGINEERING DETAILED ENGINEERING PLANT CONSTRUCTION DEVELOPMENT PRODUCTION 2ND DYNAMIC LEACHING PLANT CONSTRUCTION
(1) (2) (1) Estimated. (2) Total average annual production. (3) Approved (3) (3)
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Mining works at the main ramp concluded & further progress made on plant infrastructure However, delays in permitting, weather-related issues and high rotation of contractor personnel due to project’s remote location together resulted in execution delays
Key metric estimates
10.3 moz
43.9 koz Pre-operative capex $515 m Cash cost (average LoM) $7.77 /oz All-in sustaining costs (average LoM) $9.33 /oz Phase 1 capacity (DLP to treat ore from veins) 3,000TPD Phase 2 capacity (flotation plant to process
6,000TPD Life of mine 13 years
Phase 1 now expected to be commissioned 1H16 (vs. previous expectation of 4Q15); phase 2 remains on track (4Q16)
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Detailed engineering continues
Key metric estimates
3.5 moz
12.8 koz Pre-operative capex $155 m Cash cost (average LoM) $2.51 /oz Saucito I Saucito II Fe Plant
Filtration Plant
Leaching Plant Hauling (Truck) Fresnillo Plant Tailings Plant Old Tailings
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* Assuming a 5,000TPD expansion
Ciénega Optimisation Fresnillo Optimisation Centauro Extension Centauro Deep Description Optimisation project to increase capacity Optimisation project to increase capacity Natural evolution of the Centauro pit at Herradura Potential underground mine beneath the Centauro pit at Herradura Expected avg. annual production 15 koz gold 1.3 moz silver* 3 moz silver 200 koz gold 225 koz gold Estimated pre-
$55 m* $30 m $155 m $365 m Status Evaluation of increasing capacity to either 5,000TPD or 6,000TPD, following good exploration results Post evaluation of alternative options, smaller expansion to 9,000TPD now planned (from previous expectation
Evaluation of optimal pit design based on increased reserves as at YE 2014 Additional exploration activities ongoing to accurately de-lineate the ore bodies Expected commissioning 2018 2017 2019 2020
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Key metric estimates (100% basis)
10 moz silver 30 koz gold Pre-operative capex $300 m Indicated & inferred resources 205 moz silver 811 koz gold First production 2018
Positive drilling results will result in an increase in inferred resources Preliminary economic assessment in progress Assessing a 8,000TPD mine with a DLP processing facility; focusing on higher grade zones of the gold resource base
Key metric estimates
136 koz gold Pre-operative capex $350 m Indicated & inferred resources 8.7 moz gold 11.4 moz silver First production 2018
8km from the Fresnillo mine; Juanicipio’s mineral zones are located in silver-gold rich sulphide shoots of the veins. This project will be developed on a stand-alone basis
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Projects in blue are being prioritised
Fresnillo Saucito I & II Herradura (DLP) Noche Buena Ciénega - San Ramón Soledad &Dipolos*
San Julián Pyrites Plant Orisyvo Juanicipio Cluster Cebollitas Centauro Deep
Fresnillo District Rodeo Guanajuato Tajitos Candameña Guachichil Pilarica (Perú) San Nicolás Guazapares Coneto Lucerito Cebadillas La Yesca Cairo Dátil Amata (Perú) Norias Sonora and Sinaloa : San Javier Nudo Carina Cerritos Dorado Rosario Bellavista Olivos Chihuahua:
SJPinal Lucero Tempisque Durango: Pereñita La Huerta El Carmen Zacatecas: Urite Atotonilco Corredor Concha-Nieves Argentum Villa García Perú: Huacravilca
La Pampa
Systematic Project Generation
* Operations at Soledad & Dipolos are currently suspended.
Pipeline allows us to focus on projects that have the potential to be developed into low cost, world-class mines
34% 1% 35% 30% 2015 Budget: c.US$160m
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2010 2011 2012 2013 2014
Saucito I commissioning ($273m / 9 moz Ag) San Ramón satellite at Ciénega ($20m/ 25 koz Au; 2.5 moz Ag) Commissioning of DLP ($116m / 50 koz Au) Commercial production at Soledad-Dipolos began ($68m / 100 koz Au) Milling capacity expansion at Ciénega ($25m / increase of 180 kTPY) Saucito II commissioning ($235m / 8 moz Ag) Commercial production at Noche Buena began ($63m / 75 koz Au)
(Total invested / expected average annual production)
20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 2014 2015 2016 2017 2018 Thousand Oz Yr
Attributable
Juanicipio - 56% Pyrites Plant San Julián Saucito II Saucito I Noche Buena Herradura Ciénega Expansion Ciénega 9,000 TPD Fres Expansion Fresnillo
200 300 400 500 600 700 800 900 1,000 2014 2015 2016 2017 2018 Thousand Oz Yr
Attributable
Orisyvo Juanicipio - 56% San Julián Pyrites Plant Saucito II Saucito I Ciénega Expansion Ciénega Fresnillo Nochebuena Dynamic Leaching Herradura
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* Includes sustaining capex for projects yet to be approved
Capex for the full year 2015 now expected to be in the region of US$570m (vs. original budget of c.US$700m) Total risk capital invested in exploration in 2015 now expected to be around US$160m (vs. original budget of c.US$170m)
CAPEX Expectations
US$ Million
2015 Sustaining New Prior
$145 $185
(Underground) $105 $87
(Stripping) $89 $89 New Projects
$130 $133
$1 $60
$53 $53
DLP $25 $25
$4 $30
$18 $32
100 200 300 400 500 600 700 800 900 2015 2016 2017 2018 2019 2020
Million Usd
Sustaining Projects Approved Projects for Approval
*
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– Invest through the cycle, delivering growth and returns for our shareholders – Low cost operating mines to continue to provide a solid platform for growth – Development projects to deliver significant growth – Investment in exploration to further extend growth pipeline
Remain on track to reach our production targets: 45-47 moz of silver and 715-730 koz of gold in 2015 65 moz of silver and 750 koz of gold in 2018
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